Energy Wholesale Market Review, 1 July 2022

Headlines

Wholesale gas and power contracts registered gains compared to the previous week, though with some outliers against this trend. Day-ahead gas represented one of small number of contracts which saw prices retreat week-on-week, subsequently falling 5.9% to 160.00p/th, following periods of stronger Norwegian flows into GB, coupled with higher LNG-send out. Conversely, day-ahead power rose 1.1% to £176.00/MWh, amid bullish movements of near-term gas prices at the week’s start propping up power prices for the remainder of the week, coupled with periods of low renewables output in tandem. Elsewhere, August 22 gas was up 2.8% at 247.10p/th, and September 22 gas increased 6.5% to 316.69p/th. Similar to front month contracts, seasonal gas contracts boosted this week too, up by 7.2% on average, while both winter 22 and summer 23 gas increased 11.2% and 8.5% respectively, lifting to 375.85p/th and 231.68p/th. Somewhat against their gas counterpart contracts, seasonal power contracts declined this week, down on average by 1.9%, as winter 22 power decreased 20.6% to £250.00/MWh. On the international commodity front, Brent crude prices rose 3.1% this week to average $115.16/bl, while the EU ETS climbed 1.4% to average €84.96/t and the UK ETS lifted 2.4% to £82.95/t.

Baseload electricity
  • Day-ahead power rose 1.1% to £176.00/MWh, amid bullish movements of near-term gas prices at the week’s start propping up power prices for the remainder of the week, coupled with periods of low renewables output in tandem.
  • August 22 power climbed 2.5% at £242.00/MWh and September 22 power increased 11.8% to £305.00/MWh.
  • Elsewhere, the annual October 22 contract lost 9.9% to £227.50/MWh, 265.8% higher than the same time last year (£62.20/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power was unchanged from the week prior, remaining at £185.00/MWh.
  • August 22 peak power gained 1.8% at £250.35/MWh, and September 22 peak power increased 8.9% to £333.8/MWh.
  • The annual October 22 peak power rose 7.2% to £319.6/MWh
  • This is 354.4% higher than the same time last year (70.34/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

 

  • Most seasonal power contracts declined this week, down on average by 1.9%.
  • Winter 22 power decreased 20.6% to £250.00/MWh, while summer 23 expanded 7.9% to £205.00/MWh.
  • Like its baseload counterpart, seasonal peak power contracts boosted this week, up 6.4% on average.
  • Winter 22 and summer 23 peak power increased 8.1% and 5.4% respectively, rising to £410.40/MWh and £228.80/MWh.
Commodity price movements
 

Oil and Coal

 

Carbon

  • Brent crude prices rose 3.1% this week to average $115.16/bl
  • Brent crude prices climbed across the week. At the week’s start, prices gained traction from reports that the G7 met to discuss plans on a European wide embargo on Russian oil exports.
  • Further into the week, prices climbed in response to news that Saudi Arabia and the UAE would be unlikely to boost output at a significant enough volume to combat the on-going tightness in the oil supply market at present, continuing to feed into concerns about how the market will react to removing Russian oil from the market.
  • API 2 coal fell 2.1% to average $253.10/t.
  • The EU and UK ETS experienced similar upward price movements this week. Subsequently, the EU ETS climbed 1.4% to average €84.96/t and the UK ETS lifted 2.4% to £82.95/t.
  • Starting with the EU ETS markets, prices this week gained support from ‘several’ EU countries looking to restart mothballed coal plant to help with the on-going gas supply shortages and with higher subsequent fossil fuel generation, forcing EUA demand higher.
  • UK ETS prices this week saw gains amid periods of cooler weather (particularly by comparison to recent week) driving demand higher for gas-fired assets.
Wholesale price snapshot 

 

Posted by TEAM on 4 July 2022